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Mulvaney to Rein In CFPB Enforcement, Focus on Debt Collection

Debt collection could become the focus of a less-active enforcement division at the Consumer Financial Protection Bureau, according to an internal staff memo from acting CFPB director Mick Mulvaney.

The memo, obtained by Bloomberg Law, indicated that the CFPB will be looking to reel back enforcement in other areas including payday lending and prepaid cards.

Mulvaney said his pivot in enforcement priorities was directed at protecting both consumers as well as financial institutions. CFPB staff “work for the people,” including both borrowers and creditors: “Those who use credit cards, and those who provide those cards; those who take loans, and those who make them; those who buy cars, and those who sell them.”

“When it comes to enforcement, we will be focusing on quantifiable and unavoidable harm to the consumer. If we find that it exists, you can count on us to vigorously pursue the appropriate remedies. if it doesn’t, we won’t go looking for excuses to bring lawsuits,” Mulvaney wrote.

Nearly a third of consumer complaints to the CFPB in 2016 were related to debt collection, Mulvaney said. “Only 0.9% related to prepaid cards and 2% to payday lending. Data like that should, and will, guide our actions,” he said.

Mulvaney, who simultaneously serves as permanent director of the Office of Management and Budget, was named by President Donald Trump to oversee the CFPB after the Nov. 24 departure of Director Richard Cordray, who is now running for the Democratic nomination for governor in Ohio.

In a further sign of regime change at the CFPB, Mulvaney signaled a different approach on enforcement. “The days of aggressively ‘pushing the envelope’ of the law in the name of the ‘mission’ are over,” Mulvaney wrote.

The reorienting of enforcement priorities is likely to cheer the financial services industry, which has criticized the CFPB since its inception under the Obama administration for being over aggressive in its enforcement actions.

No Funds Requested

Separately, Mulvaney defended his decision not to seek additional funds for the CFPB’s operations in the second quarter. The CFPB sent a letter Jan. 18 to Federal Reserve Chair Janet Yellen saying he requested $0, instead saying he would use reserve funds to cover the bureau’s Q2 statutory mandates.

“I’m not trying to starve the agency,” Mulvaney said during a Bloomberg Television interview Jan. 23. “The point of the matter, though, was they had $177 million in a reserve fund. We don’t need that. That’s more than 25 percent of our annual operating costs.” Any agency with more than 25 percent of its operating budget in reserves is “absurd,” he said.

The CFPB has a unique funding structure through the Federal Reserve system established by the 2010 Dodd-Frank Act to remove it from the politics of congressional appropriations. Mulvaney said he thinks the funding arrangement, with its bypassing of Congress, is wrong. Congressional Republicans have been trying to bring the CFPB under their appropriations process.